OPINION OF ADVOCATE GENERAL
TRSTENJAK
delivered on 15 November 2007 1(1)
Case C‑404/06
Quelle AG
v
Bundesverband der Verbraucherzentralen und Verbraucherverbände
(Reference for a preliminary ruling from the Bundesgerichtshof (Germany))
(Consumer protection – Directive 1999/44/EC – Sale of consumer goods and associated guarantees – Seller’s right to require compensation from the consumer for use of goods where defective goods are replaced – Replacement free of charge)
I – Introduction
1. In the present case, the national court asks whether the provisions of the German Bürgerliches Gesetzbuch (Civil Code; ‘the BGB’) under which, in cases where defective goods are replaced, the seller may require the purchaser to pay compensation for the use of those goods are compatible with Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees (2) (‘Directive 1999/44’ or ‘the Directive’). This is the first time the Court has been asked to interpret Directive 1999/44 within the framework of a reference for a preliminary ruling.
2. The question arises in proceedings before the Bundesgerichtshof (German Federal Court of Justice) between Quelle AG (‘Quelle’) and the Bundesverband der Verbraucherzentralen und Verbraucherverbände (Federal Association of Consumer Offices and Consumer Associations; ‘the Bundesverband’) in which the Bundesverband is seeking an order directing Quelle to refrain from invoicing consumers for the use of defective goods and requiring it to repay the amount paid in the present case by way of compensation for use.
II – Legal framework
A – Community law
1. Primary law
3. Article 3(1)(t) EC provides that the activities of the Community are to include, as provided in the Treaty and in accordance with the timetable set out therein, a contribution to the strengthening of consumer protection.
4. Article 153(1) EC provides:
‘In order to promote the interests of consumers and to ensure a high level of consumer protection, the Community shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organise themselves in order to safeguard their interests.’
5. Article 95 EC provides:
‘1. … [T]he Council shall … adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.
…
3. The Commission, in its proposals envisaged in paragraph 1 concerning … consumer protection, will take as a base a high level of protection, taking account in particular of any new development based on scientific facts. Within their respective powers, the European Parliament and the Council will also seek to achieve this objective.
…’
2. Directive 1999/44
6. The second recital in the preamble to Directive 1999/44 states that ‘the internal market comprises an area without internal frontiers in which the free movement of goods, persons, services and capital is guaranteed; … it implies that consumers resident in one Member State should be free to purchase goods in the territory of another Member State on the basis of a uniform minimum set of fair rules governing the sale of consumer goods’.
7. The fourth recital in the preamble to the Directive states that ‘consumers who are keen to benefit from the large market by purchasing goods in Member States other than their State of residence play a fundamental role in the completion of the internal market; …’.
8. According to the fifth recital, ‘the creation of a common set of minimum rules of consumer law, valid no matter where goods are purchased within the Community, will strengthen consumer confidence and enable consumers to make the most of the internal market’.
9. The 15th recital states that ‘Member States may provide that any reimbursement to the consumer may be reduced to take account of the use the consumer has had of the goods since they were delivered to him; … the detailed arrangements whereby rescission of the contract is effected may be laid down in national law’.
10. The 24th recital states that ‘Member States should be allowed to adopt or maintain in force more stringent provisions in the field covered by this Directive to ensure an even higher level of consumer protection’.
11. Article 3 of the Directive, which governs the rights of consumers, provides as follows:
‘1. The seller shall be liable to the consumer for any lack of conformity which exists at the time the goods were delivered.
2. In the case of a lack of conformity, the consumer shall be entitled to have the goods brought into conformity free of charge by repair or replacement, in accordance with paragraph 3, or to have an appropriate reduction made in the price or the contract rescinded with regard to those goods, in accordance with paragraphs 5 and 6.
3. In the first place, the consumer may require the seller to repair the goods or he may require the seller to replace them, in either case free of charge, unless this is impossible or disproportionate.
A remedy shall be deemed to be disproportionate if it imposes costs on the seller which, in comparison with the alternative remedy, are unreasonable, taking into account:
– the value the goods would have if there were no lack of conformity,
– the significance of the lack of conformity, and
– whether the alternative remedy could be completed without significant inconvenience to the consumer.
Any repair or replacement shall be completed within a reasonable time and without any significant inconvenience to the consumer, taking account of the nature of the goods and the purpose for which the consumer required the goods.
4. The terms “free of charge” in paragraphs 2 and 3 refer to the necessary costs incurred to bring the goods into conformity, particularly the cost of postage, labour and materials.
5. The consumer may require an appropriate reduction of the price or have the contract rescinded:
– if the consumer is entitled to neither repair nor replacement, or
– if the seller has not completed the remedy within a reasonable time, or
– if the seller has not completed the remedy without significant inconvenience to the consumer.
…’
12. The first sentence of Article 5(1) of the Directive provides that ‘[t]he seller shall be held liable under Article 3 where the lack of conformity becomes apparent within two years as from delivery of the goods’.
13. Under Article 8(2) of the Directive, Member States may ‘adopt or maintain in force more stringent provisions, compatible with the Treaty in the field covered by this Directive, to ensure a higher level of consumer protection’.
B – German law
14. Directive 1999/44 was transposed into German law as part of the reform of the BGB. (3)
15. Paragraph 439 (‘Subsequent performance’) of the BGB provides as follows:
‘1. By way of subsequent performance, the purchaser may require the repair of the defect or the delivery of goods which are free from defect, according to his preference.
2. The seller shall pay the costs necessary for the purposes of subsequent performance, including in particular the cost of transport, carriage, labour and materials.
3. Without prejudice to Paragraph 275(2) and (3), the seller may refuse the manner of subsequent performance chosen by the purchaser if such performance is possible only at disproportionate cost. In that regard, account must be taken in particular of the value that the goods would have if there were no lack of conformity, the significance of the lack of conformity, and whether the alternative remedy could be effected without significant inconvenience to the purchaser. In such cases the right of the purchaser shall be restricted to the alternative means of subsequent performance; this is without prejudice to the right of the seller also to refuse the alternative remedy, subject to the conditions laid down in the first sentence.
4. Where a seller delivers goods free from defects for the purposes of subsequent performance, he may require the purchaser to return the defective goods pursuant to Paragraphs 346 to 348.’
16. Paragraph 346 of the BGB, which governs the effects of termination of contracts, provides as follows:
‘1. If one party to a contract has reserved the right to terminate the contract or if he has a statutory right of termination, then, if termination occurs, any performance received shall be returned, and the benefits derived from such performance shall be surrendered.
2. The debtor shall pay compensation for value, in lieu of restitution or surrender, where:
(1) restitution or surrender is excluded by virtue of the nature of what has been obtained;
(2) he has used up, transferred, encumbered, processed or transformed the object received;
(3) the object received has deteriorated or has been destroyed, any deterioration resulting from the proper use of the object for its intended purposes being disregarded.
If the contract specifies a counter-performance, such counter-performance shall be taken as a basis for calculation of the compensation for value; if compensation is to be paid for the benefit deriving from a loan, it shall be sufficient to show that the value of such benefit was lower.
3. No obligation to pay compensation for value shall arise:
(1) if the defect which gives the right to termination became apparent only during the processing or transformation of the object;
(2) in so far as the creditor is responsible for the deterioration or destruction, or in so far as the damage would also have occurred in his hands;
(3) if, in the case of a statutory right of termination, the deterioration or destruction has occurred in the hands of the person entitled, even though he has taken the care that he customarily exercises in relation to his own affairs.
Any remaining enrichment must be surrendered.
4. …’
17. Paragraph 347 of the BGB, which concerns benefits and expenditure after termination, provides as follows:
‘1. If, contrary to the rules of proper management, the debtor has failed to obtain any benefits even though it would have been possible for him to do so, he must compensate the creditor for their value. In the case of termination based on a statutory right, the person entitled must display with regard to the benefits only the standard of care which he customarily exercises in relation to his own affairs.
2. If the debtor returns the object or pays the creditor compensation for value, or if his duty to pay compensation for value is excluded pursuant to points 1 or 2 of Paragraph 346(3), he must be reimbursed for necessary expenditure. Other expenditure must be reimbursed in so far as the creditor is enriched by it.’
18. Paragraph 100 of the BGB provides that ‘benefits’ are ‘the fruits of a thing or of a right, including the benefits arising from use of the thing or exercise of the right’.
III – Facts, main proceedings and the question referred
19. In August 2002, in the context of a mail-order sale, Quelle supplied a stove-set to the purchaser for her private use at a price of EUR 524.90. In January 2004, the purchaser noticed that the enamel layer had come away from the interior of the oven which was part of the ‘stove-set’. Since it was not possible to repair the appliance, the purchaser requested – in the same month, hence within the guarantee period – a replacement. She returned the defective appliance to the seller (Quelle), who supplied her with a new stove-set and claimed payment by way of compensation for use, initially in the amount of EUR 119.97, but ultimately of EUR 69.97. The purchaser paid the latter sum.
20. On the basis of authorisation from the purchaser specifically for that purpose, the Bundesverband brought proceedings against Quelle. It claimed that Quelle should be directed, first, to refund the amount of EUR 67.86, (4) together with interest, and, secondly, to desist in future from invoicing consumers for the use of defective goods on delivery of replacement goods.
21. The Landgericht (Regional Court) Nüremberg-Fürth granted the claim for reimbursement of the amount paid and dismissed the remainder of the action. The Oberlandesgericht (Higher Regional Court) Nüremberg upheld the judgment at first instance and granted leave to appeal on a point of law. In the grounds for its judgment, the Oberlandesgericht explained that Paragraph 439(4) of the BGB could not be cited as the legal basis for the claim for compensation for use and that the reasons stated by the legislature in relation to the right to compensation were not convincing. (5) The Oberlandesgericht pointed out that there was no justification for applying the provisions concerning termination of contract to cases in which goods are replaced, given that although the purchaser receives new goods by virtue of the exchange, the seller retains the full purchase price together with any profit. (6) By contrast, where a contract is terminated the purchaser and the seller must each return what they have received. (7)
22. Both parties appealed to the Bundesgerichtshof on a point of law against the judgment of the Nüremberg Oberlandesgericht. The Bundesgerichtshof has doubts concerning the unilateral burden placed on the purchaser by the obligation to pay compensation for use, but does not see any way of correcting that imbalance by means of interpretation, since that is precluded both by the plain wording of the relevant provisions and the unambiguous intention of the legislature as disclosed by the explanatory memorandum accompanying the draft Schuldrechtsmodernisierungsgesetz (Law on the modernisation of the law of obligations). (8) The Bundesgerichtshof points out that the possibility of interpretation is ruled out wherever it would contradict the wording of the statute and the clearly expressed intention of the legislature. (9)
23. In addition, the Bundesgerichtshof is uncertain whether the German legislation at issue is compatible with Article 3(2) to (4) of Directive 1999/44, under which replacement is to be made ‘free of charge’ and ‘without any significant inconvenience to the consumer’. Moreover, it does not share the view that the Directive governs only the ‘free of charge’ requirement attaching to delivery. (10) In that connection, the Bundesgerichtshof also points out that opinion in German legal literature is divided on the question whether the German legislation is compatible with Directive 1999/44. (11)
24. In those circumstances, by order of 16 August 2006, the Bundesgerichtshof stayed proceedings and referred the following question to the Court of Justice for a preliminary ruling:
‘Are the provisions of Article 3(2) of Directive 1999/44, read in conjunction with the first subparagraph of Article 3(3) and Article 3(4) thereof, or of the third subparagraph of Article 3(3) of Directive 1999/44 to be interpreted as precluding national legislation which provides that, where consumer goods are brought into conformity with the contract by means of delivery of replacement goods, the seller may require compensation from the consumer for use of the goods originally delivered, which were not in conformity with the contract?’
IV – Proceedings before the Court
25. The order for reference was received at the Court on 28 September 2006.
26. In the written procedure, observations were submitted by the Bundesverband, the German Government, the Spanish Government, the Austrian Government and the Commission. At the hearing on 4 October 2007, Quelle, the Bundesverband, the German Government and the Commission presented oral argument and answered questions from the Court.
V – Arguments of the parties
A – Quelle
27. At the oral hearing, Quelle submitted that the reference for a preliminary ruling was inadmissible, because in the present case the Bundesgerichtshof has no option but to interpret the relevant provisions of the BGB to the effect that it is permissible to claim compensation for use. If the Court were to decide that Directive 1999/44 precludes the German legislation, the Bundesgerichtshof would be unable to abide by its ruling, because it is prohibited from doing so by Article 20 of the German Basic Law (Grundgesetz), according to which judicial authority is bound by legislation and by the law. In order to comply with the decision of the Court of Justice, the Bundesgerichtshof would have to construe national law contra legem, a course of action which is not permissible in the light of the case-law of the Court in Pupino (12) and Adeneler and Others (13) to the effect that a directive cannot provide the basis for an interpretation contra legem. As regards the answer to be given to the question referred, Quelle maintains that Directive 1999/44 does not govern the question of compensation for use, which means that the German legislature is not subject to any restriction when making provision in that regard. The German legislation is legitimate, because it enables a fine balance to be struck between the claim for repair and the claim for replacement.
B – The Bundesverband
28. At the hearing, the Bundesverband contended that the question referred for a preliminary ruling is admissible, because the issue in the present case is not how to interpret national law in accordance with Directive 1999/44, but how the Directive itself is to be interpreted. In its written observations, the Bundesverband explains that Directive 1999/44 was intended to ensure a high level of consumer protection and that goods have to be replaced ‘free of charge’ and ‘without significant inconvenience to the consumer’, which implies a prohibition on requiring the consumer to pay compensation for the use of defective consumer goods. In addition, the uncertainty surrounding the amount of compensation payable could deter consumers from asserting their rights under the Directive.
C – The German Government
29. The German Government regards the reference for a preliminary ruling as admissible, because it is necessary for the Court to interpret Directive 1999/44 in order to enable a decision to be reached in the main proceedings. As to substance, the German Government maintains that the Directive does not preclude the German legislation at issue. In its written observations in support of that view, the German Government referred to four means of interpretation: literal, contextual, historical and teleological.
30. As regards a literal interpretation, the German Government submits that Directive 1999/44 is silent as to whether, in the case of replacement, the seller may require the purchaser to pay compensation for use of the defective goods. The expressions ‘the goods brought into conformity free of charge’ and ‘to replace them … free of charge’ in Article 3(2) and (3) of Directive 1999/44 refer – according to the German Government – solely to the right to delivery free of charge (the act of delivering the replacement goods), and that is consistent with Article 3(4) of the Directive, which provides that the term ‘free of charge’ is to cover ‘particularly the cost of postage’. The phrase ‘without any significant inconvenience to the consumer’, in the third subparagraph of Article 3(3) of the Directive, simply means that the seller is not permitted to put any practical obstacles in the way of the purchaser as regards the exercise of his right to delivery of replacement goods.
31. Construing Directive 1999/44 by reference to its context, the German Government predicates its interpretation on the assumption that the first clause of the 15th recital in the preamble to the Directive does not refer exclusively to cases in which the contract has been terminated, but lays down a general legal principle. The reasons for that assumption are twofold. First, the clear statement in the common position adopted by the Council on 24 September 1998 (14) that the Member States were free ‘to adopt rules on the reimbursement in the case of goods already used by the consumer as well as on the detailed arrangements of the rescission of the contract’ indicates that these two cases are to be considered separately. Second, in the 15th recital, rescission of the contract is first mentioned, separately, in the second clause, whereas the right to reduce the reimbursement to the consumer is mentioned in the first clause, which also suggests that reduction of the reimbursement is not restricted to cases in which the contract is rescinded.
32. By way of historical interpretation, the German Government refers to the proposal (15) and the amended proposal (16) for Directive 1999/44, which show how the wording of Article 3(2) of the Directive developed, and that the Directive required only repair of goods – and not their replacement – to be free of charge.
33. According to the German Government, a teleological interpretation of Article 3 of Directive 1999/44 indicates only that the consumer is not intended to bear any of the actual costs for bringing goods into conformity with the contract. The German legislation is not at odds with the purpose of Directive 1999/44 – to complete the internal market and to protect consumers – because it is possible to exercise the right to delivery of replacement goods without bureaucratic problems or hindrance. Moreover, the Court held in Schulte (17) that the effectiveness of European consumer protection was not endangered by an obligation on the consumer, in the event of cancellation of a credit agreement, not only to repay the amounts received under the contract but also to pay interest. The German Government maintains that the principle of effective consumer protection does not preclude the claim to compensation for use, because payment of such compensation is a lesser burden than repayment of the loan in Schulte. Lastly, the German Government argues that the consumer should not profit from the fact that the goods have been replaced.
D – The Austrian Government, the Spanish Government and the Commission
34. The Austrian Government maintains that claims for compensation for use can be lawful only in cases where the contract has been terminated, but not in cases where the goods have been replaced. If it were possible to require compensation for use, there would be an imbalance between the right to repair and the right to replacement, whereas those rights ought to be equally weighted, the consumer having a right to choose between them. In economic terms, there is no real choice if repair is free of charge but replacement entails additional costs in the form of the obligation to pay compensation for use.
35. The Spanish Government argues that, as a matter of law, compensation for use is not one of the ‘costs’ referred to in Article 3(4) of Directive 1999/44, but it none the less entails economic consequences for the consumer and for that reason conflicts with the principle that replacement of defective goods is to be free of charge. Article 3(4) of Directive 1999/44 should be interpreted as meaning that the consumer is not obliged to pay costs which are directly linked to replacement of the goods.
36. At the hearing, the Commission pointed out that the reference for a preliminary ruling is admissible, because, where there are doubts as to the compatibility of national law with a directive, the question whether the Member State has fulfilled its obligations under Community law is reviewed indirectly by means of the preliminary ruling procedure. According to the Commission, the admissibility of a reference for a preliminary ruling cannot be conditional upon whether national law can be interpreted so as to be consistent with Community law. In its written observations, the Commission argues that the expression ‘free of charge’ cannot apply exclusively to the delivery of the goods. Article 3(1) of Directive 1999/44 provides that the seller is to be liable for any lack of conformity which exists at the time the goods are delivered and is therefore required, under Article 3(4) of the Directive, to pay all the necessary costs incurred in order to bring the goods into conformity with the contract. The possibility of a reduction in reimbursement is mentioned in the 15th recital in the preamble to the Directive only in the context of rescission of the contract. The Commission underlines the importance of a high level of consumer protection in Community law, and points out that by paying the price the consumer fulfils his contractual obligations and that a claim for compensation for use would disrupt the balance between seller and consumer. According to the Commission, the financial interests of the seller are sufficiently protected by the fact that he can rely on any lack of proportionality involved in replacing the goods.
VI – Analysis by the Advocate General
A – Introductory remarks
37. The national court is in essence asking whether Directive 1999/44 precludes national legislation under which, in the case of the replacement of defective goods, the seller may require the consumer to pay compensation for the use of those goods. That right is conferred on the seller by Paragraph 439(4) of the BGB, which concerns subsequent performance, read in conjunction with Paragraph 346(1) of the BGB and the first subparagraph of Paragraph 346(2), which govern the effects of termination of the contract. Those provisions of the BGB thus transpose the rules which apply where a contract is terminated to cases where goods are replaced. This is the first time in the context of a reference for a preliminary ruling that the Court has been called upon to interpret Directive 1999/44. (18)
38. In German legal literature, the question whether the right to compensation for use is well founded has provoked wide academic discussion. In support of the national legislation, writers mostly refer to the parts of the explanatory memorandum which relate to the relevant provisions of the BGB, (19) on the basis of which they argue that the purchaser obtains economic benefits from the replacement of the goods. (20) The proposition that this is compatible with Directive 1999/44 is most often justified by reference to the 15th recital in the preamble thereto and the argument that payment of compensation for use is not one of the necessary costs incurred for the purposes of bringing the goods into conformity with the contract within the meaning of Article 3(4) of the Directive. (21) However, numerous writers have also argued that the German legislation conflicts with Directive 1999/44. (22) Not only do they maintain that it is not in line with the Directive, they also criticise the one-sided nature of legislation which allows the seller to retain the profits included in the selling price. (23)
B – Admissibility
39. As regards admissibility, it should be noted – as the Commission correctly pointed out at the hearing – that the admissibility of a reference for a preliminary ruling cannot depend on whether at national level it is possible to interpret a provision of national law in such a way that it is compatible with a directive. The principle prohibiting interpretation contra legem comes into play only where the national court is seeking to interpret national law in conformity with Community law. The purpose of the interpretation given by way of a preliminary ruling is to ensure, through the interpretation of Community law, its correct and uniform application throughout the Member States. (24)
40. The references to Article 20 of the Grundgesetz concern solely German constitutional law; accordingly, that provision cannot as such affect the admissibility of a reference for a preliminary ruling. Article 234 EC alone – not national law – lays down the conditions for the admissibility of a reference for a preliminary ruling. Any other interpretation would mean that each Member State could decide for itself as to the applicability of Article 234 EC, and that could lead to a lack of uniformity in the application of Community law in the Member States. The reference for a preliminary ruling is therefore admissible.
C – Analysis
41. It must first be pointed out that whereas the BGB generally refers to ‘purchaser’ and ‘seller’, Directive 1999/44 refers to ‘consumers’ and ‘sellers’ who sell consumer goods. In the present case, it is possible to place the purchaser within the category covered by the term ‘consumers’ (25) and the seller within that covered by the term ‘sellers’ (26) for the purposes of Directive 1999/44; moreover, the sale of the stove-set for private use constitutes a sale of ‘consumer goods’ (27) within the meaning of the Directive.
42. The central problem in the present case is the interpretation of the expression ‘free of charge’, which appears in Article 3 of the Directive, and the related question of whether the requirement to ‘replace [goods] free of charge’ means that the seller must not require the consumer to pay compensation for use of the defective goods.
43. On a literal interpretation, it must first be pointed out that under Article 3(1) of Directive 1999/44 ‘[t]he seller shall be liable to the consumer for any lack of conformity which exists at the time the goods were delivered’. The Directive thus clearly provides that the seller is to bear responsibility for any lack of conformity, at the time of delivery, in the goods delivered and that he must accept liability for his faulty performance. If legislation were to be approved under which the seller may require compensation for the use of the goods, the seller would no longer bear full responsibility for the lack of conformity which existed at the time of delivery, and part of the liability which ought to be borne by the seller would ultimately be transferred to the consumer.
44. Article 3(2) gives the consumer the right ‘to have the goods brought into conformity free of charge’, which means that at the request of the consumer the goods may in the first instance be brought into conformity, free of charge, by repair or replacement. In that connection, the consumer must, in my opinion, choose – as between repair and replacement – whichever is both possible and proportionate. (28) If neither repair nor replacement is both possible and proportionate, the consumer may demand a reasonable reduction of the price or rescind the contract. (29) Article 3(3) of Directive 1999/44 expressly reiterates that both repair and replacement must be ‘free of charge’. The normal meaning of the expression ‘free of charge’ in Article 3 of the Directive is itself enough to indicate that the German provisions are not compatible with the Directive. (30) The expression ‘free of charge’ is defined in Article 3(4) of Directive 1999/44. That definition precludes the German legislation for two reasons.
45. First, Article 3(4) of Directive 1999/44 states very clearly that ‘free of charge’ covers ‘the necessary costs incurred to bring the goods into conformity’. Regardless of whether the seller demands payment of compensation for use as a precondition for replacing the goods or replaces the goods and subsequently requires compensation for use, this may be regarded as a cost incurred for the purposes of bringing the goods into conformity with the contract. The expression ‘free of charge’ is to be interpreted in the light of Article 3(1) of Directive 1999/44, under which the seller is to be liable for any lack of conformity which existed at the time the goods were delivered; however, that means that the seller must bear all the costs incurred for the purposes of bringing the goods into conformity.
46. Second, as regards the German Government’s submission that the costs included ‘particularly the cost of postage, labour and materials’, it is to be held that this list is merely illustrative, not exhaustive. By using the word ‘particularly’, the Community legislature intended to indicate that it was simply identifying the most typical examples of costs which could be incurred in replacing goods, and was not limiting the scope of the provision in question. On the basis of the maxim exempla illustrant non restringunt legem, it may therefore be held that the term ‘costs’ covers not just the costs of delivering the goods which are in conformity with the contract. (31) The definition in question indicates that ‘free of charge’ covers the costs incurred for the purposes of bringing the goods into conformity with the contract, encompassing the listed examples of costs, as well as all other costs which might be incurred where replacement goods are delivered.
47. Clarification is also required as to whether the claim for payment of compensation for use causes the consumer ‘significant inconvenience’ within the meaning of the third subparagraph of Article 3(3) of Directive 1999/44. In that regard, I agree with the Austrian Government’s view that paying compensation for use entails ‘significant inconvenience’ within the meaning of the Directive. The term ‘significant inconvenience’ covers not only practical obstacles to replacing goods but also inconvenience in general, and financial ‘inconvenience’ is an additional inconvenience which, to my mind, can be even more significant than the practical obstacles facing the consumer where the goods are replaced.
48. Furthermore, as the Commission rightly emphasised in its written observations, the seller’s financial interests are adequately protected by the possibility open to him of claiming that the remedy chosen by the consumer is disproportionate. Under the second subparagraph of Article 3(3) of Directive 1999/44, the remedy is disproportionate ‘if it imposes costs on the seller which, in comparison with the alternative remedy, are unreasonable’. If replacement of the goods would entail unreasonable costs for the seller, he can reject the consumer’s request for replacement. By the same token, if repair of the goods is also impossible or disproportionate, the consumer may choose the subsidiary remedy and require reduction of the price or rescission of the contract. Thus, the Directive gives the seller sufficient protection while at the same time enabling the consumer to enforce his rights effectively. (32)
49. Consideration must also be given to how the claim for payment of compensation for use operates in practice. If the seller requires the consumer to pay compensation for use and repair is not possible, the consumer ultimately has little choice. If the seller makes payment of compensation for use a precondition for replacing the goods, the consumer can either pay compensation for use and get new goods, or not get new goods. Even if the seller does not make payment of compensation for use a precondition for replacing the goods but requires it subsequently, the consumer may be uncertain whether or not to request replacement of the goods. That being so, it can happen in practice that because of the claim for compensation for use the consumer simply does not enforce his claim to replacement of the goods, and such a result would in any event run counter to the wording and purpose of Directive 1999/44. In theory, on the basis of the third indent of Article 3(5) of Directive 1999/44, the consumer could rely on the fact that replacing the goods would cause him significant inconvenience and either require the seller to reduce the price or rescind the contract. However, it is doubtful whether any notice would in fact be taken of such an objection, given the current German legislation. Such a situation could deter the consumer from exercising any of his rights under Directive 1999/44. Account should also be taken of the fact that, in practice, the claim for compensation for use is particularly problematic in relation to products which depreciate quickly in value and whose price can fall significantly between sale and replacement on account of the development of a new model; that is so in the case of computers, mobile telephones and cars, for example. (33) In those circumstances, the consumer receives a model which, at the time of replacement, is worth less than at the time of purchase; and, in addition, he still has to pay compensation for use.
50. Thus, it is already clear from a literal interpretation of Article 3 of Directive 1999/44 that the Directive precludes legislation as the German legislation at issue. Although, to my mind, a literal interpretation already makes the answer to the national court’s question quite plain, (34) it is merely a starting point which requires to be confirmed by the other methods of interpretation. (35) A teleological and a contextual interpretation both lead clearly to the conclusion that Directive 1999/44 precludes the German legislation. That is supported by a number of arguments.
51. A teleological interpretation of Directive 1999/44 indicates that its aim is to achieve a high level of consumer protection. That is clear from Article 3(1)(t) EC and Article 153(1) EC; (36) under the latter provision, the Community – in order to promote the interests of consumers and to ensure a high level of consumer protection – is to contribute to protecting the health, safety and economic interests of consumers. (37) Legislation such as the German legislation at issue clearly runs counter to the Community’s attempt to achieve the highest possible level of consumer protection and, in particular, to the aim of protecting the economic interests of consumers.
52. In the context of consumer protection, the specific purpose (38) of Directive 1999/44 is to ensure a minimum level of harmonisation of the provisions relating to sale of consumer goods and associated guarantees. (39) The requirement of a minimum level of harmonisation is clear not only from the 24th recital in the preamble to the Directive, but also from Article 8(2) thereof, which state that Member States are free to adopt or maintain in force more stringent provisions than those provided for by the Directive, in order to ensure a higher level of consumer protection. A teleological interpretation leads to the clear conclusion that the German legislation, under which the consumer is guaranteed a lower level of protection than under Directive 1999/44, is therefore clearly incompatible with the Directive. In addition, it should be noted that Directive 1999/44 guarantees mandatory standards for consumer rights and that the parties to a contract are not permitted to agree a lower level of consumer protection in accordance with which the replacement of goods would no longer be free of charge. (40)
53. Furthermore, it is clear from the second, fourth and fifth recitals in the preamble to Directive 1999/44 that the ultimate aim of the attempt to achieve a high level of consumer protection is the smooth functioning of the internal market, (41) which allows consumers to obtain consumer goods in other Member States freely. (42) On that basis, a higher level of consumer protection can promote what is known as ‘passive’ free movement of goods and freedom to provide services, in terms of which consumers purchase goods or receive services in other Member States. (43) In order to ensure free movement of goods and freedom to provide services, the conditions applied to consumers in relation to the purchase of goods and the receipt of services must be as uniform as possible, including the conditions relating to the ‘free of charge’ requirement attaching to the replacement of goods. Those conditions may be less favourable in Germany, because the seller is able to demand compensation for use, and that can lead to distortions in the internal market and to restrictions on the free movement of goods and the freedom to provide services. In that context, it is to be noted that in some Member States the seller cannot require the consumer to pay compensation for the use of defective goods. (44) It is conceivable that a consumer from another Member State who has suffered having to pay compensation for use in Germany will hesitate to shop there again.
54. The fact that the aim of Directive 1999/44(45) is to improve the functioning of the internal market is also apparent from the legal basis for the Directive, Article 95 EC. (46) According to the case-law and academic comment, Article 95 EC can provide a legal basis for a Community measure only if that measure is intended to improve the conditions for the establishment and functioning of the internal market and genuinely has that object, actually contributing to the elimination of obstacles to the free movement of goods or to the freedom to provide services, or to the removal of distortions of competition. (47) Measures which harmonise those conditions merely by way of incidental effect cannot be enacted on the basis of Article 95 EC. (48)
55. Nor can a contextual interpretation support the conclusion that, by virtue of the 15th recital in the preamble thereto, Directive 1999/44 makes it permissible to claim compensation for use. It is necessary to consider first the formal (external) features of that recital. (49) It is clear from the conceptual structure of this recital that it refers only to rescission of the contract. The fact that rescission of the contract is mentioned only in the second clause of the recital does not mean that the first and second clauses are to be considered separately: rather, the entire 15th recital is to be considered as a conceptual whole. If it is read in that way, it is obvious that the reimbursement payable to the consumer may be reduced only where the contract is rescinded.
56. Second, a contextual interpretation must have regard to the overall conceptual (internal) structure of Directive 1999/44, which must be assumed to form a coherent whole with no internal inconsistencies. (50) If, on the basis of the 15th recital, the Directive were construed as permitting the seller to claim compensation for use, that would mean that there is an internal inconsistency as between that recital and Article 3 of the Directive which provides that the delivery of replacement goods is to be free of charge. In addition, it should be pointed out that, if the 15th recital does indeed carry the meaning attributed to it by the German Government, its content is not reflected in the enacting terms of Directive 1999/44.
57. I find it just as difficult to agree with the German Government’s argument that a historical interpretation of Article 3(2) of Directive 1999/44 shows that the seller can require the consumer to pay compensation for use.
58. The fact that the wording used in the Commission’s last proposal – ‘to repair the goods free of charge … or to replace the goods’ (51) – was changed in Directive 1999/44 to ‘to repair the goods or … to replace them, in either case free of charge’ (52) is in any event an argument in favour of the view that the replacement of goods must also be free of charge in every respect. (53) I regard that change of wording as additional evidence for the fact that the Community legislature clearly intended to provide that not only repair but also replacement of goods should be free of charge, and that it therefore did not follow the original wording used in the Commission’s proposal. A corresponding conclusion may also be drawn from the press release prepared by the Conciliation Committee, (54) on which the German Government relies and which is said to prove that the expression ‘free of charge’ covers only the costs of repair, in particular the cost of postage, labour and materials. The wording of Directive 1999/44 differs from the wording of that press release, which is further proof of the fact that Directive 1999/44 was clearly intended to provide that the replacement of goods is to be free of charge. (55)
59. It should also be emphasised that even if a historical interpretation is thought to point to the result suggested by the German Government, that method of interpretation is not sufficient in itself and cannot be decisive, (56) because it plays only a subsidiary role in the interpretation of Community law. (57) The true meaning of rules of Community law can be derived only from those rules themselves, in the light of their context and purpose. (58)
60. Two further arguments put forward by the German Government remain to be considered in this Opinion. The first relates to the case of Schulte, and the second to the question whether the consumer is unjustifiably enriched by the exchange of the goods.
61. In my opinion, the case of Schulte, (59) on which the German Government relies, cannot be invoked in the context of the problem of entitlement to compensation for use.
62. In the first place, Schulte concerned the protection of consumers in situations where the contract is rescinded, that is to say, rights wholly distinct from the replacement of goods. In addition, Schulte did not concern rescission of the contract on account of a lack of conformity in the goods purchased – as is provided for in Article 3(5) of Directive 1999/44 – but cancellation of a loan agreement. In Schulte, the Court held that Directive 85/577/EEC (60) does not preclude national legislation ‘which provides for an obligation on the consumer, in the event of cancellation of a secured credit agreement, not only to repay the amounts received under the contract but also to pay to the lender interest at the market rate’. (61) Thus, in Schulte, the Court accepted a provision of national law which applied the principle that the contracting parties must each give up the benefits received. However, the position is different as regards a claim for replacement of defective goods. The claim for replacement of defective goods is not based on the principle of mutual surrender of benefits received but on the principle that contracts are to be interpreted favor contractus, in accordance with which the contract is maintained in force so far as is possible; the purpose of replacing the goods is performance of the contract.
63. In the second place, Schulte clearly establishes the principle that where a contract is rescinded the consumer is not necessarily obliged to return the loan plus interest if the other contracting party has not properly fulfilled its obligations. In paragraph 94 of the judgment in Schulte, the Court held that it was not incompatible with Directive 85/577 for rules of national law under which a consumer who cancels a credit agreement must immediately repay the loan in full with interest at the market rate not to apply in cases where the trader has failed to comply with his obligation under the directive to provide information. In the context of the principle that the contracting party who has not properly fulfilled his obligations is himself liable for his faulty performance, it is accordingly possible to compare rescission of the contract with replacement of defective goods. However, that again supports the view that, in the case of the replacement of defective goods, the seller must bear full responsibility for his faulty performance, and in consequence pay all the related costs.
64. Nor is it possible in the present case to maintain that the consumer has been unjustifiably enriched. (62) By paying the purchase price, the consumer has properly fulfilled his obligation under the contract for the sale of consumer goods, whereas the seller has not performed his contractual obligation. Accordingly, in the light of the principle pacta sunt servanda, the claim for replacement of the goods is no more than a claim that the seller should perform his contractual obligations. Each party to the contract must accept the risk that it may not perform its obligations thereunder properly and in full. Responsibility for the fact that goods have to be replaced does not lie with the consumer: all he wants is to use the goods normally, and the seller is required to enable him to do so.
65. It would therefore be unacceptable if the consumer, having properly performed his contractual obligation, were required to pay compensation to the seller, who has not properly performed his obligation, for use of defective goods. The receipt of the new goods signifies merely that the consumer is receiving what he is entitled to receive – namely goods which are in conformity with the contract – and, accordingly, it is not seriously arguable in the present case that the consumer has been unjustifiably enriched.
66. For all those reasons, I am of the opinion that Directive 1999/44 precludes the German legislation under which, in cases where consumer goods are replaced, the seller has the right to require the consumer to pay compensation for use of those goods.
VII – Conclusion
67. On the basis of the foregoing considerations, I suggest that the Court should reply that Article 3(2) of Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees, read in conjunction with the first subparagraph of Article 3(3) and Article 3(4) of that directive, or the third subparagraph of Article 3(3) thereof, is to be interpreted as precluding national legislation under which, where consumer goods are brought into conformity with the contract by means of their replacement, the seller may require the consumer to pay compensation for use of the goods originally supplied, which were not in conformity with the contract.